Provider Profiling: Severity-Adjusted Versus Severity-Based Outcomes

Providers will continue to experience increasing pressure to demonstrate cost-effective, high-quality care. For relevant comparisons between providers, outcomes must be evaluated with respect to severity of illness and mortality risk. However, most hospitals use patient classification methods, such as Medicare and Health Care Financing Administration diagnosis-related groups (DRGs), which group together different levels of severity and mortality risk. The most common approach for developing severity-adjusted outcomes for groups of cases with dissimilar severity levels is to divide a statistic by a factor such as the Medicare case mix index, which was not designed or intended for that purpose. As an alternative, providers are increasingly using severity-based methods that classify patients as to severity levels within each diagnosis-related group. The key to severity-based profiling is the classification of cases to similar patient groups and comparison to selected benchmarks for variance analysis at each severity level. Effective provider profiling requires that hospital staff and physicians work together toward the common goal of accurate and complete documentation and coding of all medical conditions. Through use of more accurate severity-based profiling, providers are better able to identify opportunities to improve performance and demonstrate cost-effectiveness and quality to buyers, beneficiaries, and third-party reviewers.